Malaysia eyes 5% - 6% GDP growth from 2016 - 2020

A HUGE rise in productivity will drive the economic growth in Malaysia from 2016 until 2020 in the country’s bid for high-income nation status. The Government is targeting to achieve a gross domestic product (GDP) growth of between 5% and 6% per annum through these years.

Expansion expected to be driven by jump in productivity

As part of the 11th Malaysia Plan (11MP), the final plan towards Malaysia’s vision of high-income nation status, growth will be less dependent on inputs from capital and labour.

Higher productivity will be achieved by carrying out initiatives at all levels. Industrial productivity will be raised through greater adoption of automation and upgrading of skills.

Under the plan, the innovation ecosystem will be enhanced by new and improved processes and technologies.

The Government has set its targets based on the crude oil price trading at US$71 per barrel. It also aims to have a balanced budget by 2020.

Among its targets are to increase labour productivity from RM77,100 in 2015 to RM92,300 in 2020, and for gross national income (GNI) per capita to reach RM54,100 (US$15,690) in 2020.

Also, the 11MP sets out to increase the average monthly household income from RM6,141 in 2014 to RM10,540 in 2020, and raise the share of compensation of employees to GDP from 34.9% in 2015 to at least 40% in 2020.

The Malaysian Wellbeing Index, which measures improvement in the wellbeing of the rakyat, is also to increase by 1.7% per annum compared to 1.2% in the 10th plan.

The report said economic growth of 5% to 6% will be backed by expansion in private consumption and investment, resulting in a 7.9% per annum rise in GNI per capita.

Worker salaries are also to rise, resulting in a more equitable distribution of income between capital owners and employees.

Overall wellbeing should improve as a result of rising household incomes and other inclusiveness and wellbeing initiatives.

The macro-economic policy framework for the plan period focuses on enhancing the resilience of the economy.

During the 11th plan, strategies will continue to ensure a conducive and competitive environment with stable prices, supportive levels of interest rates and foreign exchange rates.

Inflation during the period is expected to remain low, averaging between 2.5% and 3% per annum, with accommodative monetary policy and administrative measures to ensure price stability.

The economy is projected to have an estimated unemployment rate of 2.8% by 2020. Employment is expected to grow at a slower rate of 2.1% per annum to reach 15.3 million by 2020, creating 1.5 million new jobs.

Expected slower growth in the services and manufacturing sectors will reflect labour productivity and the shift from a labour-intensive economy to a capital, technology and knowledge-based economy.

The composition of skilled jobs is targeted to reach 35% of employment by 2020.

Source : Malaysian Investment Development Authority dated 22 May 2015